Alcohol Levy has failed - BIDPA report

Publishing Date : 03 October, 2018

Author : KETUMILE RAMATITI

President Mokgweetsi Masisi and other relevant stakeholders are expected to seriously consider findings of a consultancy report carried out by government think-tank Botswana Institute for Development Policy Analysis (BIDPA) on the alcohol levy.

A 171 paged report titled: A study to evaluate the National Interventions against Alcohol Abuse in Botswana, has punched holes on the imposed government alcohol interventions with specific interest on Alcohol Levy. The study which was carried out last year as per the recommendations of Ministry of Health and Wellness (MoHW) has labelled the levy as redundant and costly for the economy.

Originally introduced in 2008, the alcohol levy was raised every year until 2015 at point which it was sitting at 55 percent. The levy has since been revised to between 50 and 55 percent depending on the alcoholic volume of the liquor. This year it was reported that the levy made P2.6 billion. Generally, it is said, the drinking behavior has not changed much since the introduction of the alcohol levy and its associated interventions such as restrictions in the hours of sale.

However, it is also clear that a combination of the intervention has potential and can make significant impact overtime. “An insignificant 2.5 percent attributed their change in drinking pattern to the imposition of the alcohol levy as a confirmation that the alcohol levy had very little impact on reduction of alcohol abuse in Botswana.”

The alcohol levy did not affect the decision of members to drink or reduce the numbers of households with at least one-member drinking. In terms of consumption expenditure, alcohol and tobacco remained among the top four commodities after food, transport and housing costs. It has been therefore concluded that the alcohol levy has resulted in a slight decrease in expenditure on alcohol and tobacco (0.4 percentage points) at national level which may have a positive effect on household well-being.

“However, in rural areas the effect has been negative since expenditure has been shifted from food to compensate for the increase in alcohol prices due to the levy, and this has negatively impacted on the livelihoods of members of such households especially children and the elderly.”

BIDPA as per the research says the levy which was intended to curb excessive alcohol consumption has in fact increased consumption. People, as per the perception that alcohol is expensive have resorted to other means of getting themselves intoxicated.

“People are now drinking more, using money meant for basic households needs such as food, clothing, school uniform etc. to buy alcohol, drinking cheaper home brews, and increasingly using other substances such as glue sniffing and marijuana to sustain addiction,” the report read in part.

As consumers switch to alcoholic beverages with high alcohol content and spirits, the local brand, St Louis has suffered as it has low alcohol content. In addition, the report states, the alcohol producer and distributors have observed that consumers have switched to buying in bulk as this is relatively cheap. “For instance, consumers have switched from buying 330 ml to 440 ml cans and more importantly to 750 ml bottled beer.”

BIDPA says before the implementation of this, there was need to be based on evidence. “The industry players argue that when the alcohol levy and other measures introduced to curb excessive alcohol consumption were introduced there was no research to back the interventions or benchmarking undertaken to ensure their effectiveness.” Further the report argues that “alcohol Levy Fund should be used for its original purposes such as building of rehabilitation centers to help those already addicted.”

The effect of the levy on household cannot be underestimated. “The reality on the ground is that since the introduction of the different measures to curb alcohol abuse many people who drink alcohol in excess have resorted to diversion of household income to alcohol at the expense of other pressing needs such as food switching to and drinking low cost alcohol resorting to the use of drugs such as marijuana mixing alcohol with drugs to get the maximum effect.”

The alcohol levy has made poor people poorer, according to the report. All their income is spent on buying alcohol. “All the money received is blown in one day … to buy nothing but this devil,” one respondent was quoted saying. The report which is expected to guide policy makers on other interventions reveal that the levy did not lead to a reduction in alcohol consumption. “Instead, people who drink continued to drink the same way they did before the imposition of the levy, some drink even more.”

The alcohol levy, reduction in trading hours and other interventions meant to reduce excessive alcohol consumption have not been effective. Some of the interventions such as reduction in trading hours have been rendered ineffective because people have resorted to buying beer in bulk, mainly at bottle stores where it is relatively cheap, to later drink at bars outside the stipulated trading hours or at their homes.

“A simulation exercise to analyses the impact of alcohol levy introduced in 2008 based on 50 percent temporary increase in alcohol prices and a 50 percent permanent increase in alcohol prices indicate that the levy had a slightly small impact on the demand for alcohol. In light of the results we can conclude that more investigations are needed to explore the real impacts of the alcohol levy,” report says.

The reasons as to why people drink varied from as high as 50 percent for those who drink alcohol in order to socialize. Other reasons that push people into drinking include, among others, enjoy the taste (31 percent) to get drunk (22 percent).
Other reasons for alcohol consumption rated below 20 percent were; the urge to be mentally alert, relieve pressure and tension, as well as to forget about social problems and painful memories.

EFFECTS OF THE LEVY ON EMPLOYMENT

According to the research KBL indicated that after the introduction of the levy in 2008 and subsequent increase in 2010, job losses were minimal as they were able to absorb the costs through the sales of sorghum beer (Chibuku). However, the introduction of the Traditional Beer Regulations in 2012 resulted in loss in employment starting from 2013.

The traditional beer regulations made it mandatory for chibuku to be sold in licensed premises. Before the regulations were introduced the majority (over 80 percent according to KBL) were selling chibuku from their homes without licenses. After the introduction of these regulations the majority of the retailers, most of whom are women closed down their businesses because they could not comply with the law.

As a result of their low income status they could not find suitable places to sell their chibuku and hence could not get licenses to do so. This drastically reduced (80 percent) the amount of chibuku sales by KBL and hence revenue. KBL had to close some of its distributions depots (Selibe Phikwe and two breweries one in Palapye and another one in Lobatse). This led to direct job losses, which KBL estimates at between 150-200 people.